- Payday loan use is rising in BC with increasing pressure on family budgets
- Latest research shows 8 in 10 British Columbians stressed about inflation and rising costs of living
- Over half of respondents in a recent poll of BC residents do not understand the term ‘APR’, a term used to communicate interest charges by payday lenders
VANCOUVER, BC / Unceded Territories of the Musqueam, Squamish and Tsleil-Waututh Nations, July 10, 2024 (GLOBE NEWSWIRE) -- Community Savings, a purpose led BC credit union, today announced its fair rate alternative product to payday lending – the ‘Express Loan’. The product provides the lowest interest rates in BC for short-term loans.
A recent poll of over 800 BC residents, conducted by Community Savings Credit Union, shows that 8 in 10 respondents are often stressed about inflation and the rising cost of living. According to additional research, there is a growing trend of BC consumers increasingly resorting to payday loans to make ends meet. Access to quick cash in the form of short loans makes living pay-check to pay-check easier. However, payday lenders unfairly target economically stressed or low-income borrowers by charging unethical and exacerbated rates that create financial inequities and unbreakable debt cycles.
The research conducted by Community Savings also indicates that over half of BC residents (57%) do not know what an ‘APR’ (Annual Percentage Rate) entails – and yet payday lenders rely on this language to describe interest rate charges. Awareness is particularly lower among low-income individuals, with 68% unaware of what APR means. This means many consumers underestimate the interest they will be paying, and payday loans trap them into a cycle of debt.
Community Savings is on a mission to drive predatory payday lenders out of business in BC and help consumers break free from debt cycles by providing a fair-rate alternative product. The Express Loan product features an industry-first model that is designed to be non-profit - if any profits are generated from the Express Loan program, Community Savings will redistribute them to borrowers annually.
“Payday loans create a destructive lending cycle that drives families in BC into long term debt. When life happens, we are here to help current and future members with an affordable same-day service for emergency situations and financial advice to help members step off the payday loan cycle.
Our end goal is to end predatory payday lenders and their unfair rates and fees. We are committed to providing a fair-rate alternative for members in need with a first-of-its-kind program designed to generate no profits from it for the credit union - If there is profit from delivering this product, those excess funds will go back directly to program participants annually” said Mike Schilling, President and CEO, Community Savings.
The Express Loan offers a 17.5% fixed interest rate for short-term loans of up to $2,500. The difference in interest consumers will pay between Community Savings’ Express Loan program and other payday loans is stark. For every $1,000 borrowed for a same-day loan over a 14-day period, a consumer can expect to save $143.29 with Community Savings’ Express Loan over payday lenders.
| Community Savings | Other BC Payday Lender* | |
| Loan Amount | $1,000 | $1,000 |
| Repayment Period | 14 days | 14 days |
| Total Cost of Borrowing | $6.71 | $150 |
| Total Amount to be Repaid | $1,006.71 | $1,150 |
Community Savings Credit Union is calling on other short-term lenders to pivot away from jargon like APR. They are urging the use of dollar amounts to show consumers the true cost of interest on their loans. This is a proven behavioural science intervention that uses psychology and economics to improve consumer decision-making. In Texas, this method led to a 12% reduction in payday loan volume.
If you’re a consumer looking for a financial institution that provides a fair alternative to payday loans, get in touch with Community Savings Credit Union: https://www.comsavings.com/you/get-a-loan/express-loan
About Community Savings:
Community Savings Credit Union is driven by its purpose to unite working people to build a just world. As BC’s largest fully unionized credit union, Community Savings provides best-in-class personal and business banking.
Community Savings operates six branches across the Lower Mainland and Victoria. It lives by its values, from being the first financial institution to become a Living Wage employer in 2010 to winning the 2022 BCBusiness Business of Good Workplace Wellness Award for its innovative staff wellness programs. For more about Community Savings, visit www.comsavings.com.
Methodology:
These are the findings of an online survey conducted by Community Savings from June 13 to June 20, 2024, among a representative sample of n=808 Canadians living in BC age 18+ who are members of the Angus Reid Forum. The survey was conducted in English. For comparison purposes only, a probability sample of this size would carry a margin of error of +/-3.5 percentage points, 19 times out of 20.
*Source: MoneyMart https://www.moneymart.ca/loans/cash-advance
Media Contact:
Yulu Public Relations
cscu@yulupr.com
